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The Llavador—Roemer— Silvestre North—South model

The Llavador-Roemer-Silvestre study is the only one that directly tackles the issue of climate change as a North-South problem.[1] In their model, they simulate North by the current situation in the US, and the South by the current situation in China. They assume that the goal of this stylized world is to stabilize emissions at 450 ppm of CO2. They assume that in this world there will be a convergence of North and South in terms of sustainable growth (to keep the CO2 from rising above 450 ppm of CO2) at the rate of 1 percent gross domestic product (GDP) growth per year. In order to achieve that, they find that the transition paths require a drastic reduction of the share of emissions in the North, large investments in knowledge in both the North and the South, as well as very large investments in education in the South. To sustain the economic growth rate in the North, some resources must be transferred from South to North during the transition. Thus, there is a tradeoff during the transition: the North cuts emissions but requires resources from the South. Thus, the standard argument that developed countries have to reduce CO2 emission and give resources to the developing countries is not possible in terms of a resource allocating growth maximizing strategy of the world as a whole.

  • [1] Humberto Llavador, John E. Roemer, and Joaquim Silvestre, “North-South Convergence andthe Allocation of CO2 Emissions” Paper Presented at the European Economic Association &Econometric Society, 2011 Parallel Meetings, Oslo, Norway, August 26, 2011 (accessed March 15, 2013).
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